The approval of schemes of arrangement for two USIT companies is likely to be approved by the High Court on Monday. A decision on the matter was reserved yesterday by Mr Justice McCracken. The companies are expected to survive under new ownership.
Under the proposed schemes, creditors of USIT Ireland Ltd, trading as USIT Now, would get 15 cent per euro while creditors of USIT World.Com would receive 3.5 cent per euro. The investors proposing to take over the companies are Ion Equity, a Dublin finance house, and two as-yet- unnamed property investors. They will invest €2.2 million in USIT Ireland and €300,000 in USIT World.Com.
The schemes of arrangement were opposed yesterday by Mr Ray Jackson, of accountants KMPG, who earlier this month was appointed liquidator to USIT World plc. He is also liquidator to USIT Ltd, a Northern Ireland company, which was stated to be owed €19 million by USIT World.Com.
Mr John Gordon SC, for Mr Jackson, argued it was unfair that one group of creditors was receiving less than the other group and that the proposed investors were putting so much more money into USIT Ireland than they were into USIT World.Com.
Mr Mark Regan, of Adams solicitors, for the Irish Association of Travel Agents, said his clients were not objecting to the schemes but were anxious for the protection period to continue until they had satisfied themselves as to the creditworthiness of the investors. This would require a short period of time.
Ms Grainne Clohessy, for the directors of the two companies, said the proposed schemes had their whole-hearted support. The companies had traded successfully during the period of the examinership. There were 300 employees in USIT Ireland and nine in USIT World.Com. The directors would be very concerned if the schemes were not approved.
Advocating confirmation of both schemes, Mr Michael Cush SC, for the examiner, Mr David Hughes of Ernst & Young, said the scheme for USIT Ireland had the overwhelming support of creditors who were owed more than €23 million. Counsel rejected the submission on behalf of Mr Jackson that the investors were treating the two companies as a single entity.
During yesterday's hearing, Mr Justice McCracken was told the Union of Students of Ireland was owed €7.6 million and was supporting the proposed schemes. Aer Lingus, which was owed €1.7 million, was also supporting the scheme as were the Revenue Commissioners, who are also creditors.
The court heard that an €18 million investment in USIT World.Com and its information technology system had now been effectively written off.
Originally, there were 35 companies in the USIT group, which had operations in 25 countries, the court heard.
The €18 million invested in USIT World.Com was put into a system that never got up and running and a new system would be required. The company's assets are of little value.
USIT Ireland has assets of approximately €25 million, mostly property, the court heard. The court heard the company had been trading well since it was placed in examinership 70 days ago and had been paying bills accrued in the period. It had sent 6,000 students to the US this summer.
The law prohibits schemes that unfairly impair the interests of creditors of related companies. However, Mr Justice McCracken said that, in the current case, the creditors of USIT World.Com would be worse off if the investors did not invest and the companies were simply put in liquidation.
"The fact remains that both sets of creditors are doing better than they would do otherwise," Justice McCracken said.
